Global equities and commodities markets end month on cautious note

Friday, May 29, 2015

European equity markets remained under pressure during the last trading session of the month, as persistent concerns regarding Greece’s economic stability and future weighed on market sentiment. The CAC, DAX, IBEX and London equity benchmark indices retreated sharply for a second consecutive session falling between 0.25% and 1.9%. However, the euro bucked the downtrend and continued its upside momentum to retest 1.10 against the USD today.

EURUSD Spot

EUR Curncy (Euro Spot )  Daily 29 2015-05-29 16-19-32

We received fairly disappointing US economic data which limited any risk appetite. The US economy shrunk by 0.7% in Q1 2015 compared to a growth of 0.2% in Q4 2014. Personal consumption rose 1.8% in Q1 2015, missing analysts’ expectations of a 2.0% rise. In addition, the Chicago PMI index declined below the key level of 50.0 at 46.2 in May,below analysts’ expectations of 53.0. However, data from the University of Michigan survey proved to be more optimistic showing current US economic conditions at 100.8 in May compared to a previous 99.8. The USD index came under renewed pressure hovering around 97.0 against a basket of currencies.

The softer USD offered further support to crude oil prices ahead of the crucial OPEC meeting next week. Brent front month futures surged over 2.7% and towards $65 per barrel, while WTI front month futures climbed higher towards $60 per barrel.

It seems that the strong USD has dominated the markets in May, weighing on most commodity prices. Furthermore, speculation of a possible earlier than expected interest rates rise in the US has limited any upside potential in global equity and commodity markets. In the meantime, investors continue to remain cautious regarding Greece’s debt crisis, as no agreement has been reached between the Greek government and its creditors after five straight months. It is likely that trading conditions might remain fairly volatile and nervous in the short-term. 

USD index

DXY Curncy (DOLLAR INDEX SPOT)   2015-05-29 16-20-52

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